Gong Shuguang: Cultural industry bubble is surging, and new platforms are not suitable for investment

Gong Shuguang, Secretary of the Party Committee and Chairman of Hunan Publishing Investment Holding Group and Chairman of Zhongnan Publishing Media Group, believes that the current capital market has both joys and worries for the entire cultural industry: the surging tide of China's cultural industry in recent years has made the entire cultural industry overvalued, so investors should treat it cautiously, which is a worrying aspect; The good thing is that the cultural industry is overvalued, a bubble is emerging, and will soon be replaced, which reflects that the cultural industry will usher in a wave of good investment opportunities.

On April 16, the 2016 Ningbo Cultural and Financial Cooperation and Development Forum, hosted by the Ningbo City People's Government and Economic Daily, was held in Ningbo, Zhejiang. Gong Shuguang, Secretary of the Party Committee and Chairman of Hunan Publishing Investment Holding Group and Chairman of Zhongnan Publishing and Media Group, delivered a keynote speech titled "Future Investment Direction of Cultural Industry". He believes that the current capital market has both joys and sorrows for the entire cultural industry: the surging tide of China's cultural industry in recent years has made the entire cultural industry overvalued, so investors should treat it cautiously, which is a worrying aspect; The happy aspect is that the cultural industry is overvalued, a bubble is emerging, and will soon be replaced, which reflects that the cultural industry will usher in a wave of good investment opportunities. At the same time, he proposed four major areas worth investing in the cultural industry and the future investment direction of the cultural industry.

Gong

Shuguang, Secretary of the Party Committee and Chairman of Hunan Publishing Investment Holding Group and Chairman of Zhongnan Publishing and Media Group

, gave me a topic on the future investment direction of the cultural industry. In fact, this topic should not be given to me, but to researchers. First, my understanding of China's cultural industry is based on my own work and industry, and there is no comprehensive research. Second, this topic is "fortune-telling". fortune-telling is not something that an entrepreneur like me does, but should be something that scholars do. But respect the organizer, since I have been given such a topic, I will return to such a topic. Because after all, I have to "open an outpatient clinic" and "prescribe" every day in the industry. People who come to me here are sick. When they come to my door, they have to prescribe prescriptions, and they don't go out without prescribing them. Maybe the prescription didn't work, or the wrong medicine was prescribed, but he had to be given a prescription, so I might be more down-to-earth when talking about this topic.

China's cultural industry, how do I evaluate this market? I think the current capital market has both good news and bad news for the entire cultural industry. I think that the surging assets of China's cultural industry in recent years have made the entire cultural industry overvalued. As investors, they should pay careful attention to the promise that it will be placed at a high level

, so I think it is a worry. The happy thing is that the cultural industry is overvalued, and a bubble in the cultural industry is emerging and will soon be replaced. After the bubble appears and is replaced, I think there are still a wave of good investment opportunities in China's cultural industry. Therefore, I think there are many risks in investing in the cultural industry, and there are great opportunities for not investing yet and preparing to invest. This is my basic assessment of China's cultural industry.

What aspects are the bigger bubbles? First, I thinkthe Internet education bubble is relatively big. This is the hottest area in China's capital market in the past two years. Digitalization in China must be government-led. In less than ten years, it has become a mainstream teaching field. Now they are basically at a loss. The vast majority of these non-profitable companies will not last ten years.

Second, there is a huge bubble in the film and television field. Nowadays, movies are always available, and Zhejiang has a good film and television base. I think the overall valuation of movies and televisions is too high and has exceeded its return level in the next 10 or 20 years. The risks of film and television dramas are increasing. Movies are a limited industry. There are only so many bottles in our country. Our country's theater lines are not yet mature. However, China should now produce more than 500 films. Everything you see may make money, and what you don't see may not be harvested. Television in China far exceeds the time period acceptable for "one drama, one star", so the vast majority of TV dramas in China lose money, and the ones broadcast may not be able to get the full amount of money.

The third bubble is the so-called IP economy. It's very popular nowadays. It's actually copyright. The so-called multi-copyright rate is the hottest word from the beginning, but I think the bubble is big because the IP economy is using a novel or script to make TV series, movies and even games. I have just talked about film and television. After the IP economy has transitioned from books to film, television and games, games have relatively more platforms, and nothing else can be used. This is an industry that I think has a high valuation.

What are the industries with low valuations? Enterprises with truly low resourcesare undervalued, and the undervaluation of cultural enterprises is less than 20 times. What does an industry ultimately compete for after it matures? Competition for resources is the first thing that is underestimated. The second thing that is underestimated is that in the process of "Internet +", the integration of Internet and resources has basically taken shape, but enterprises that have not yet become profit support points have been underestimatedbecause they have actually basically completed integrated development, but their industrial scale and profits have not increased, and they are underestimated at this point in time. I think this is the place with the highest and lowest valuations. This is the first issue I want to talk about, that is, the current capital market of the cultural industry is high and low, with both joys and worries.

Second, what areas do I think are worth investing in? Among the listed cultural enterprises, the policy confidence projects that mainstream cultural enterprises need to invest in deserve everyone's attention. What is the so-called mainstream cultural enterprise? I call an enterprise that has a division of labor in the country's cultural industry and can share in the country's cultural industry policies a mainstream cultural enterprise in China. Let me give you an example. Websites have a division of labor. For example, Zhongnan Media has a division of labor in the country's industry, because I have to account for about 5% of the market and profits of China's publishing industry, and there is a division of labor. Exactly because of listed companies, why emphasize listed companies? All investors must consider the exit mechanism. If it is not a listed company, your exit mechanism will be limited. What is a policy information project for mainstream listed cultural enterprises? my country's cultural enterprise policies are not getting wider and wider, but getting narrower and narrower. The Ministry of Culture may be reforming and expanding the limits of policies. What are the biggest risks for investment in cultural industries? It's a policy risk. You don't have the qualifications to stop you at any time. It is not certain whether you will be given the qualifications or not in the future, especially under the new Internet policy. Which companies will it be given to? I think there is a division of labor in the country's industries, and enterprises that share policy resources can get them, and most of the projects done by these enterprises can be invested. Why? Aren't we engaged in diversified industries now? Aren't we going to create a diversified property rights structure? At this time, no matter whether the nature of your capital is personal or fund, if there is foreign investment in individual fields, most of them have no foreign investment. I think the success rate or return rate of future investment is relatively high. When I was researching, I found that the capital market did not have a clear understanding of the basic attributes of the cultural industry. Social benefits and economic benefits must be developed in a coordinated manner, and social benefits should be put first. Many cultural enterprises cannot invest because you put social benefits first. I can't invest. Some people ignore this sentence. If social benefits are put first, the state will give special policies to division-oriented enterprises, and these policies are only enjoyed by mainstream enterprises, so your success rate is high.

Second, resources of traditional enterprises. We have radio, television and newspapers, all of which have resources. So far, few of these origins have been truly integrated on the Internet and mobile Internet, and of course, some have been completed. People's Daily and People's Daily have basically been completed, but they have basically not been integrated. Once the resources accumulated by these companies over the past ten years are integrated, they will become leading companies in the industry. However, our capital market currently ignores these companies and considers them traditional. There are two types of successful Internet companies around the world. One type is like Facebook and Microsoft. Everyone ignores resource-based companies. Last year, 65% of revenue came from online, and this year it will definitely be 80%. Dutch companies used to be the largest scientific publishers, publishing 2000 undergraduate journals around the world. The New York Times, which everyone is most familiar with, has its download revenue exceeding its advertising revenue. These traditional resource-based companies have become Internet giants. These companies have been ignored. These may become resource integration for companies like the New York Times. platform.

The third category is new products produced by the combination of technology and culture. It is really a new product that combines new technology and culture. The first category is virtual space products. Virtual space products are very popular now, but are they too hot? It's not too hot. I looked at the best product in the world on Facebook. Its products have its limitations. Now it's a person playing alone. You can't tell about its company, but it's good in VR. This shows that there is still a lot of space for VR. People may say what does it have to do with our Ningbo? It may not matter because the foundation is too high. But it may also matter. Facebook things are so expensive, but residents in rural China also want to buy VR? Ningbo used to have a strong production capacity for small household appliances, and Ningbo can do it. For example, if it is a community-type product, I think it is a truly technological and cultural + product.

Intelligent robots, I think, are one direction. Instead of replacing the functions of TV and radio in the past with robots, I now chat with friends abroad. What I do is to use your favorite host and use the robot to tell you the daily news. It can also be told to you in Hou Baolin's way. This type of product is worth making. Our current intelligent robots are mainly used in industrial manufacturing, but now some people use robots as spiritual services.

The fourth category of cultural stars. Nowadays, there are many cultural stars, singing, singing and Internet celebrities. Were these stars worth anything in the past? It is worthless because traditional business models are different. The traditional business model basically cannot control stars. The first legal system is imperfect, and the second family uses another method to control stars. I don't say about America, I say India. As we all know, there is Hollywood in the United States, Bollywood in India, and Indian stars use triads, so the traditional economic model is basically unreliable. How to discover the value of these stars? Nowadays, the Weixin Official Accounts of many Internet celebrities have reached 1 million or 2 million. In fact, the same business model is not worth a lot of money. Fatty Luo is very valuable now. He is now worth more than 1 billion yuan. He only has so many Weibo posts because his business model has changed. In fact, many companies are now reforming the business models they use for celebrities. Once the business model changes, I think it can be valuable. If the business model remains unchanged, it will not make money.

The future investment direction is first, new policies, second, new platforms, third, new products, and fourth, new business models. However, I have limited opinions on these four new ones. Not all new platforms can be invested, and not all new business models can be invested. I have limits. It's just a family's opinion. I'll tell you if I think so for your reference only. Thank you!

Editor: vian